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House rejects ownership rule change, sets up possible veto conflict

August 1, 2003

The House of Representatives last week handed the Bush Administration and its FCC chairman a resounding defeat in a battle over the commission’s efforts to liberalize media ownership rules that would allow a single broadcast company to own stations reaching as much as 45 percent of the national TV audience.

By a vote of 400-21, the House passed a spending bill that would roll back the upper limit on national audience reach to 35 percent. The commission voted June 2 along party lines to adopt the media ownership rule changes, which among other things increased the percentage to 45.

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Prior to the vote, FCC Chairman Michael Powell issued a statement, available at www.fcc.gov, defending the rule change: “We are confident in our decision. We created enforceable rules that reflect the realities of today’s media marketplace. The rules will benefit Americans by protecting localism, competition and diversity.”

However, lawmakers from both parties voiced their displeasure with the commission’s rule change after hearing from a diverse group of individuals, interest groups, dissenting FCC commissioners and owners of smaller TV stations that objected to the commission’s new rules.

Among the winners if the new FCC rules were to stay intact are Viacom, which owns the CBS and UPN networks and News Corp., which owns Fox television. Both currently exceed the 35 percent rule and had secured temporary waivers prior to the action of the commission. If the commission’s rule is reversed, both would be required to liquidate some stations to come into compliance.

Meanwhile in the Senate, Democratic Senator Byron Dorgan from North Dakota introduced a “resolution of disapproval” challenging the commission. Thirty-five senators -28 Democrats and seven Republicans- co-sponsored the resolution that would undo the rule change. Dorgan’s resolution would restore the national audience cap to 35 percent and undo changes to the cross-ownership rule.

Having more than the 30 votes needed to bypass committee debate, the resolution is scheduled to be considered by the full Senate. Dorgan also plans to send the resolution to the Senate Commerce Committee, which oversees the FCC, despite having the require number to circumvent the committee. Arizona Republican John McCain who chairs the committee has signaled he will move quickly on the resolution.

The House’s roll back of the ownership cap is attached to a routine funding bill covering appropriations next year to pay for the departments of Commerce, State and Justice. GOP leadership seeking to avoid a repudiation of the administration’s desire to liberalize media ownership restrictions are hoping to extract the reinstatement of the 35 percent cap when the bill goes to conference.

Failure to do so could result in a presidential veto of the spending bill; however, given the public outcry over the change and opposition to it in both houses of Congress that may be difficult to do as the 2004 presidential race heats up.

Some have speculated that if the president fails to veto the bill, Powell may resign. Over the past few weeks rumors have circulated in Washington that the chairman plans to resign. Media reports point to FCC staffers working for Powell who have recently begun seeking employment elsewhere. For his part, the chairman denies he plans to tender his resignation.